SUSTAINABLE ENERGY: A DOUBLE BOTTOM LINE PLUS AFTERTHOUGHT?

The definition of sustainable enterprises is the so-called Triple Bottom Line, wherein economic, ecologic and community benefit are all considered and balanced. Is that last leg of the stool given mere lip service or is the practice of energy recognizing this element fully? And ought it to be?

The economic consideration is a given. Without that there is no profit, and absent profit, no enterprise. The ecologic or environmental piece is much in evidence today and few new energy enterprises would dare ignore this element. The societal element is harder to define. One is tempted to think that this is strictly composed of negative impacts upon society, because that is where the rhetoric is directed. In some ways it suits the developers to cast it in this light rather than a more generic one. So, for example, visual pollution is denigrated as a personal preference rather than pollution in the classic sense.

The Reality of Visual Pollution: Perception is reality, the saying goes, and marketing folks know well that this is a powerful adage. One cannot bully people into feeling a certain way. Certainly not in commerce. But on an issue of alternative energy, some nudging, in the Thaler sense, is in order. Richard Thaler and Cass Sunstein wrote a powerful essay Libertarian Paternalism in the top-economics journal American Economic Review. Non-economists, such as I, must not be daunted by the staid prominence of said journal; this is an easy read. A further easier read, one that costs some money or trouble (going to the library) is their book Nudge. Basically they posit the notion that given free choice people generally do not make the best decisions for themselves, even in an economic sense. They need to be given a nudge. The point of all this meandering is that just because folks “feel” a certain way about visual pollution does not mean they cannot be nudged to a different position.

One way to do that is to clarify the options. Until recently the Sierra Club was against coal, nuclear and hydrocarbons in general (coal is a hydrocarbon, but one challenged in hydrogen content, and most think of it as a different species, but it is not). Last time I looked, that position was tantamount to suggesting we grind industry and life as we know it to a halt. And this is me, a life member of the organization talking. Wind and solar are great options. But they are still fledgling and incapable of base load service. In the interests of fairness, the Sierra Club now supports natural gas as a transitional fuel, still to the consternation of much of the membership.

Duke professors recently made famous by their paper connecting well water methane concentrations to shale gas production suggest in an op-ed piece in the Philadelphia Enquirer that we eschew shale gas in favor of wind and solar. No matter that each of these has opposition as well. There are entire communities that will not permit a visible display of solar panels on homes. Wind power has long been opposed on visual lines. North Carolina, the home state of the aforementioned professors, has a law preventing wind farms on mountain sites, known as the Ridge Law. Many communities have strong opposition to offshore wind production in sight of land.

When one flies into Amsterdam airport, wind farms are in abundance in the water. Personally, I think they look like a flock of birds; but I am a techie, what do I know. Perhaps their acceptance is premised on the Dutch having had windmills as a way of life on farms. More likely is the explanation that it is that or Russian gas. In Holland that may not be the direct option, but in Greece, which is dominantly dependent on Russian gas, it would be. Southern Germany still remembers when the Russians capriciously shut down the pipeline through the Ukraine in the cold days of January 2009. So, opposition to something should come hand in hand with a consideration of the alternative. Unfortunately, a well-informed public is an oxymoron, and the fault does not lie with the public.

Societal Benefit: Fair and equitable economic benefit to the local and regional communities ought to be a goal of sustainable energy development. In Australia’s Northern Territories, uranium mining has provided a dividend to each native Aborigine, conjuring up the image of traditionally garbed locals riding on the beds of Toyota trucks. Every resident of Alaska gets an oil related dividend of substance. But these are the exceptions.

One measure would be similar to that in Alaska. Royalties on production would in part be distributed to the county in question. At the very least, this would go to ameliorate some of the damage to infrastructure. In the case of shale gas drilling, the principal one coming to mind is the deterioration of lightly constructed farm roads by heavy trucks. Beyond the issue of mitigation of damage, the community as a whole ought to benefit in some measure from the overall enterprise. The fortunate leasers of mineral rights should not be the only ones to benefit. That sort of inequity is a sure recipe for neighbor turning on neighbor, particularly when the have-not neighbor incurs some direct negative consequences of the activity.

Technology Forks in the Road: Technology choice can often have a direct effect on the local populace. These forks in the technology road fall into two broad categories: benefitting the local environment and aiding the local economy. The first one is an easy choice if other things are about equal. An example of that is in fracturing operations associated with oil or gas production. As the industry became more skilled at drilling horizontally, the increasing reach of a given well allowed a new technology, known as pad drilling. This involves drilling and producing from up to 25 wells from a single location known as a pad. The number of roads needed drops as does the areal extent of the effects of traffic. Also, this aggregation of wells allows for better supervision and oversight to minimize mistakes. Pad technology was developed in Colorado for the express purpose of minimizing road footprint. It now is even more important in farming communities such as in Pennsylvania.

Biofuels could face similar forks. The conventional approach would be to transport the biomass or crop great distances to giant chemical processing plants. Technologies are being developed to bring the mountain to Mohammad, as it were. These must be specialized to not incur the penalties of reduced scale, but that is happening. This will not only reduce road transport, but also it would create local jobs, which in many instances are high paying ones.

Distributed power is another example. Small 50 to 100 megawatt plants using biomass, wind or mini-nuclear, to name a few, could provide localities. In the limit they could eliminate the need for costly and unsightly transmission lines. At short distances, direct current would be a viable and preferred option to alternating current. Edison would have smiled.

In summation, the societal benefit component of energy alternatives need not be an afterthought. Many elements can be brought to bear with no adverse consequences to the economics of the enterprise. Also, the lasting value of being a good citizen cannot be underestimated. It’s simply good business.

I am intrigued by the idea of shale drilling profits being distributed to the community at the local and individual level. However, property rights being the holy cow that there are, how is this to be accomplished? By reminding land owners with shale rock to love thy neighbor or local taxes?

I am a big proponent of small solar plants to provide energy at for local communities direct from plant to home bypassing the Utilities. Is this in the realm of science fiction? Given the horror storing awating Duke/Progress ratepayers, independence from the Utility monopoly is my utopian dream.

I am not a policy guy, but one could do what Alaska does. As I understand it, the royalties on production are in part distributed to the public. I suppose, and others could weigh in on this, in principle the property value can be seen as going up. It certainly is in a way. If sold it will have a higher value. So property taxes may be the way. But I am no expert.